The holiday season may be history but if youre like a lot of Canadians, the holiday credit card bills are still with you. Spring isnt just the perfect time to for a home cleanup, its also an ideal opportunity to review your spending and consider ways to get your financial house in order.
Here are 8 achievable ways to get started:
1. Make paying down debt your first priority. Racking up debt, particularly on high-interest credit cards, is all too easy to do and tough to dig yourself out of. Try your best to pay more than the minimum required each month, and certainly more than just interest charges. Need an incentive? Think about the $30 or $50 or more you pay just in interest each month and imagine what you could treat yourself to if that money wasnt going to your credit card company.
2. Can you bring in more income? Take pen to paper and write down all the things youre good at and how much you can realistically charge to do them. Could you sell those mouthwatering cupcakes everyone loves? Could you tutor kids at your local school in math or English? Do you have a finished basement you could easily convert into an apartment or a spare bedroom to rent out?
3. Eight wheels vs. four vs. two vs. none. Its hard for many of us to imagine not having the freedom of four wheels to take us where we want to go. But owning a car is a huge expense. And unlike your home, which is likely to increase in value over the long term, a car is a depreciating asset its worth less and less the longer you own it. And not only that, the longer you own it, the more youre likely spend on maintenance and repairs. Calculate how much owning a car costs you every month, including gas, insurance, parking, as well as occasional tickets and repairs? Say its $750. That means, without a car, you could pay off $5,000 of credit card debt in just 8 months. Consider bicycling instead or walking, taking public transit or carpooling. Not having a car, or having just one, isnt for everyone, but its a big way to get your financial house in order pretty fast.
4. Starting an emergency fund. Once youve managed to deal with debt, putting money aside every week or month to deal with home or personal emergencies is a great idea. Setting aside $10 a week will grow to $520 in just a year, $20 will net you over $1,000, a comfortable cushion if your dryer breaks down or the neighbor throws a baseball through your living room window.
5. Not depriving yourself. Many of us who diet deprive ourselves from many of the foods we love and in doing so, we sometimes break down, overeat and reverse the progress weve made. Sometimes moderation works better than deprivation. The same goes for financial planning. If you try to not spend anything at all on the things you want, youre likely to walk into a store one day and blow your budget. Instead, treat yourself to something nice once a month but always remember to edit. You love three tops? Choose just one and leave the others in the change room.
6. Letting go. Often, purchase decisions are emotional and spontaneous. We see something we love and say to ourselves just this once or I deserve it! One of the most effective ways to control overspending is to walk away. Leave the item in the store and resolve to come back the next day. More often than not, by the time you get home, youll have already cooled off and common sense will have prevailed.
7. Enlisting loved ones. If you have a partner or children, sit down together and brainstorm ways you can all try to improve your familys financial habits and save money. Can you skip summer vacations until youre in more secure financially? Eat at home more or order in less? Cut back on video games? Every bit helps and its easier to save if youre all in it together.
8. Figuring out how much to save. Planning for a secure financial future is a challenge, theres no doubt about it particularly if you dont really know how much you need to save in the long run. Speaking to a financial advisor or use an online financial calculator to help figure out how much you ought to budget and set aside for your future. Once you have a goal, you can figure out how much to save every month, and how to alter your spending habits to get there.
What are the most effective financial planning tips youve tried? Send the Shop Talk Blog community your best money-saving ideas.
Did you know?
Owning a dog for 10 years costs an average of how much?
The answer is (d)! And that doesnt even include the cost of buying your pooch in the first place.